Weekly Report - 07 February 2019 (WR-19-05)

PERU: Vizcarra’s grand transformation

President Martín Vizcarra presented a plan on 31 January to drive economic growth and convert Peru into a developed country over the next 20-30 years. Vizcarra accepted that it was an ambitious targetbut argued that 2018 marked an important beginning with record public investment and a referendum to undertake key reforms, combat corruption, and overhaul the judiciary to encourage private investors. In the 10 monthssince taking office Vizcarra hasexceededthe wildest expectations of the Peruvian public, succeeding where his predecessor Pedro Pablo Kuczynski (2016-2018) failed in driving a wedge in the right-wing Fuerza Popular (FP, Fujimoristas), which should have ended the obstructionism of congress.

President Vizcarra presented the plan while inaugurating a ‘forum on competitiveness and productivity towards a modern and inclusive Peru’, along with his senior cabinet ministers. Vizcarra said that public investment hit a record NS$35.5bn (US$10.56bn) in 2018, and private investment would pick up as Peru consolidates itself as a modern and efficient state, with effective, accountable, and robust institutions.

Vizcarra highlighted the importance of the referendum and measures against corruption and impunity. His own government should be able to advance its own policy agenda much more effectively from now on after the revamped congressional leadership committee recomposed the legislative commissions under the vice-like grip of FP to include representatives of new benches. This reflects the formation of three new congressional blocs – Cambio 21, Bancada Liberal, and Unidos por la República – made up primarily of dissidents from FP and deputies from Kuczynski’s Peruanos por el Kambio (PPK). There are now 10 different blocs in the 130-seat congress making it more fragmented than at any point over the last 19 years.

Daniel Salaverry, the president of congress who recently left FP, said the committee-level changes would “refresh” congress, leading to more dialogue and consensus. FP might have lost control of congress and become a divided force, but it still wields influence. A special prosecutor in the corruption case involving the Brazilian construction company Odebrecht, Rafael Vela, last week sought the recusal of the three judges on the second appeals court dealing with organised crime after it voted in mid-January to recuse Judge Richard Concepción Carhuancho from the case.

Concepción Carhuancho ordered the preventive detention of FP leader Keiko Fujimori last October for alleged laundering of money provided by Odebrecht to her 2011 presidential campaign. The second appeals court, however, recused him after accepting a complaint by the defence team of Jaime Yoshiyama, a fugitive from justice in the US, who served as Fuerza 2011 secretary general and Fujimori’s campaign coordinator in 2011, accusing him of bias. The complaint singled out comments by Concepción Carhuancho on 1 January, in an interview with the Peruvian radio broadcasting company RPP, when he claimed that “a political party has captured the attorney general’s office”, and confirmed that he meant FP.

Vela declared the recusal of Concepción Carhuancho to be “illegal and irregular”, while there have been street protests accusing FP of seeking a legal pretext to remove him from the process in order to try to free Fujimori. Judge Octavio Sahuanay, one of the three judges on the second appeals court Vela wants recused, has called on the first appeals court to reject the request on the grounds that the decision cannot be appealed.

Callao corruption

The former governor of the region of Callao, Félix Moreno (2011-2019), has been convicted to five years in prison for collusion against the state. Moreno was found guilty of undervaluing a 70,000m2 state property by NS$10m (US$3m), and ordered to pay NS$30m (US$9m) compensation to the state. Moreno, a fugitive from justice, also stands accused of accepting US$2m of bribes from Odebrecht.